50% drops by 2011

mr.broderick

ruggedtoast wrote: »

After peaking in the late 80s, property prices didnt start to recover until the mid 90s. If youre going to draw erroneous parallels with previous market conditions you may as well get your fact straight.

And just for your information house prices started falling almost 12 months ago, whereas the stock market didnt take a tumble until comparatively recently.

I know things are happening very fast and its hard to keep up, but try and pay attention.

Otherwise you'll have to keep on being wrong and people will have to keep on putting you straight.

Interesting, his post was rather informative and supported with hard facts, one of his better ones in fact. So rugged coast what is your plan sir? Why don't you share your wealth of insider knowledge with us..

Lotus-eater

mr.broderick wrote: »

Time will tell. I expected it all to be worse than this at this point.

Worse?

What do you want, 25% drops in a year?

Lets be realistic here, that was never going to happen.

mr.broderick

Lotus-eater wrote: »

Worse?

What do you want, 25% drops in a year?

Lets be realistic here, that was never going to happen.

Why not they went up fast enough

luvpump

Arguing on message boards isn't going to make a jot of differance, we will just have to wait till all this unravels, but like the guy in the clip said... you dont have the biggest asset bubble in History pop without a serious deflation after it .. IMO 35% is quite likely, but there again that is just an opinion...but I am sure you will find many who agree with me !!..at least more than disagree

Dithering_Dad

ruggedtoast wrote: »

I know things are happening very fast and its hard to keep up, but try and pay attention.

Pretty much the same comment here as I made with Carolt. We can all make our points and disagree and debate the issue but it doesn't have to descend into hysterics and name calling. Let's try and get beyond all that?

As it happens, the stock market was falling well before house prices, it just didn't crash as spectacularly because a lot of companies were hiding their troubles and hoping things would turn around. Things didn't and we saw the result last week (and in the corrections that occurred right back to when Northern Crock went belly up). The stock market is not as transparent as the housing market.

carolt

Dithering_Dad wrote: »

No need to make this personal Carol, you could have made your point (as I did) without all the hysterics and 'joker' nonsense. I thought we were past all that, as individuals and on the forum as a whole?

Anyway, it's refreshing to see that even a very enthusiastic HPCer like Carol will go as far as admitting that house price falls are 'stabalising'. However there are some basic arithmetical mistakes that are often made within this forum. Allow me to provide an example...

If we had 12 months of HPC with falls of 1% per month, the HPC crowd would calculate this as a 12% annual drop and remark that if someone owned a £100k house, after 12 months the house would be worth £12k less at £88k.

This is incorrect. After the first month the house would have reduced by 1%, which is a £1000 drop and so it would be worth £99k. After the second month the house would lose a FURTHER 1% of its value (99K x 1% = £990).

so to extrapolate... a 1% month on month loss would result in:
Month 1 = £1000 loss, house worth £99,000
Month 2 = £990 loss, house worth £98,010
Month 3 = £980 loss, house worth £97030
Month 4 = £970 loss.....

As can be seen, the losses are actually DECREASING as time goes by. In order to maintain the amount of losses, the month on month percentage would have to increase each month...

As far as your reference to house prices after the 'Black Monday' crash in 1987, here are the average house price figures from 1987 to 1989:


1987 Q4 £92,568
1988 Q1 £93,651
1988 Q2 £99,236
1988 Q3 £108,692
1988 Q4 £112,187
1989 Q1 £114,793
1989 Q2 £116,674
1989 Q3 £116,567

As we can see, despite the BlackMonday crash in October 1987, house prices continued to rise (and there was a big jump in Q3 1988) so I'm not sure what your point was in reference to this event?

Like I said, I wouldn't have wanted to buy shortly after the crash of 87 - unless I planned on selling very quickly. And of course, the housing market hadn't been falling for the preceding 12 months. This time, the falling stock market is in large part caused by global house over-valuations - so to say the stock market waking up to this, belatedly, means it's all over now, seems somewhat optimistic.

Obviously, the amount of a monthly fall on a property falling in price is less, from one month to the next, if the percentage remains the same - but as I said, the percentage falls are at best stabilising - it depends on which set of figures you use as to whether or not you think that is the case. Equally, it can easily be argued they are getting far larger if you use Land Registry figures, say.

Either way, it adds up to nice tidy falls, and a strong argument not to buy as we go into a recession - even if you are lucky enough to be sure that your employment is recession proof, plenty are not in that fortunate position, meaning prices must fall further.

Dithering_Dad

luvpump wrote: »

but I am sure you will find many who agree with me !!..at least more than disagree

The majority of people used to believe that the Earth was flat and that the universe revolved around the earth. In fact I think you were burned at the stake at one point in history for being a heretic if you said that the Sun didn't revolve around the earth.

Just because the herd agree with each other doesn't mean they are right.

mr.broderick

Dithering_Dad wrote: »

The majority of people used to believe that the Earth was flat and that the universe revolved around the earth. In fact I think you were burned at the stake at one point in history for being a heretic if you said that the Sun didn't revolve around the earth.

Just because the herd agree with each other doesn't mean they are right.

I am going to say this only once. Now is the time to break from the herd. I will remind the members of this comment in 12 months time. (Just got my new diary and put entry in for Oct 14th 2009, remind mse how great i am)

carolt

Dithering_Dad wrote: »

The majority of people used to believe that the Earth was flat and that the universe revolved around the earth. In fact I think you were burned at the stake at one point in history for being a heretic if you said that the Sun didn't revolve around the earth.

Just because the herd agree with each other doesn't mean they are right.

Quite. We all remember the very vocal mse'ers - now sadly no longer posting let alone vocal - who suggested a year ago that prices would never fall! Just because lots of people believed property prices could only go up didn't make it right.

A minority of posters at that time - and yes, I was one - believed prices would fall. I still think that.

Maybe I'll be proved wrong this time. But I doubt it. Time will tell.

Dithering_Dad

carolt wrote: »

Either way, it adds up to nice tidy falls, and a strong argument not to buy as we go into a recession - even if you are lucky enough to be sure that your employment is recession proof, plenty are not in that fortunate position, meaning prices must fall further.

I see what you're getting at here, but as the standard mortgage term is 25 years (actually more than this if you move house a few times), you will find that your home ownership will span 3 or 4 recessions or economic downturns.

Would you then say that people should never buy a house because they will suffer in a recession and may lose it?

In many respects starting a business or making a house purchase in a recession gives you a position of strenth rather than weakness - you know what the bad times are like and so instead of making merry in the good times, you remember the bad and salt money away.

I don't want to generalise too much but I must admit that I have found that a lot of the HPC people are very risk adverse, in fact overly so. Perhaps this is why many of them miss financial opportunities and then grumble of forums about their lack of 'luck', when in fact they should be addressing their lack of confidence?